jainen

>>Do I just ignore the canceled debt for this year<< Why do you think there was any cancelled debt? If it was a non-recourse loan, the debt was satisfied in full by the property itself. That's what non-recourse means. If it was a recourse loan (which it apparently was), they still owe whatever they still owe. That's what recourse means. That's what personally liable means. Even if the bank takes the house for whatever value, they still owe the rest of the balance due. That's what no 1099-C means.

>>10% of product sold is 0.10 x (sales total). End of discussion.<< If you think that's how it ends, how do you think it begins? The formula describes a common split--you keep 90%, I'll keep 10%. You're thinking $1000 is 100%, but it really is only 90%. If that's your share, then the full amount must be $1111. So how much is she really selling? The formula is supposed to be applied to the total, not just your share. One of the finest examples of this thinking is how banks create money out of literally nothing. They have to keep 10% in reserve, so you would think that if you deposit a thousand dollars they can lend out $900. But they say if you deposit $1000 they can lend out $9000. It all depends on how you define 100%. Anyway, in my opinion the only question is whether the agent sells enough to earn whatever she earns?

>>Am I splitting hairs?<< I think you are. The foreclosure is treated as a sale, and (assuming the loan was cancelled) the balance of unamortized points is deductible in the ordinary way. Remember, either the points represent an actual cash payment at time of purchase, or they were added to the loan amount and became part of the foreclosure and C.O.D. income, so he is not double-dipping. Take the deduction.

>>Since this is less than $950, no tax return needs to be filed for the OTHER CHILD nor does the $300 of dividends and interest need to be reported on the parent's tax return - correct?<< No time for questions in April! It's not so bad for you to ask, but the parents are going to ask too and it will take you longer to explain it than to just show them the finished returns with no tax due!

>>She also itemizes her deductions and claims everything<< That sounds like she is claiming things that he paid. In my opinion, she can't do that so he could itemize in the normal way. Anyway, it's his only choice. He can't use the standard deduction on an MFS return if his spouse itemizes.

>>if anyone has figured out a new memory jogger<< I'll ask 'a. Our 49th state also has some community property laws, although it is not generally considered a community property state.

>>not anti republican or democrat<< Or, you might say, not Democrat or Anti Republican. This article is full of standard Republican Party talking points about big government and over-taxation. The only actual politician blamed is a Democrat, besides the President and his administration. He complains about the private central bank, but doesn't mention who those owners are or who chose the governors. And that long list of taxes are overwhelmingly the vote of LOCAL communities, a safe cheap shot. Yeah, Charlie--good one!

>>no one is crazy enough like me to use a low FMV for rental property (based on comps) vs. using cost for the depreciation basis<< Isn't that just the standard treatment according to statute? I can't answer the software question, but surely you have an easy way to make basis adjustments for this common situation.

>>Stock Basis Inherited Fom Husband<< It depends on what you mean by "inherited." I would guess it gets a step-up, but when marital assets are held as separate property it is not always simple. You don't help us understand when you say, "No estate tax return was filed since all assets went to the spouse per his will." There is no spousal exemption for estate tax, so do you mean she had already received it as a gift, perhaps acknowledged by the will? Do you mean no PROBATE was filed, perhaps because the assets were actually in a trust?

>>a staement or disclaimer that I can get her to sign that says she delcares that all the information she is providing me is accurate and backed up by documentation<< How about, "I declare that all the information I am providing you is accurate and backed up by documentation"? I don't want to disparage gut feelings, but in my observation psychic abilities can seem somewhat more keen than they actually are during times of sleep deprivation. Only if her records and explanations appear to be inconsistent or incomplete are you bound to resolve them. Otherwise just move on, vowing in the back of your mind that this summer you are REALLY going to work on an engagement letter.

>>what has us all a bit confused<< No need for confusion on that point. According to Pub 504 at My link, the term "divorce or separation instrument" includes "any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement)."

>>I can't seem to visualize how to report it on the 1040.<< Visualize the instructions to Schedule D at My link. "Report the transaction on line 1 or 8, depending on how long you owned the home. Complete columns (a) through (e). Because the loss is not deductible, enter -0- in column (f)." You get to this result in different ways, depending on your software. Some programs provide a worksheet for sale of home, others may have a code or checkbox for the transaction. Otherwise use a simple override.

>>are you saying you would capitalize it over 39 years or take it all as maintance and repair<< Well, in my opinion if the carpet is attached to the building as a capital improvement, it is depreciated as part of the building. However, in my further opinion, a replacement carpet is not necessarily a capital improvement as it does not create new equity, or prolong the life of the building or make it suitable for a different use.

>>Thanks for any illumination<< Thank the CPA -- he did all the illuminating.

>>No way carpet or even vinal flooring last that long.<< In my opinion, the idea of standardized life for ACRS and MACRS was to prevent arbitrary and subjective opinions about it. If the carpet is attached to the building as a capital improvement, it is depreciated as part of the building. However, in my further opinion, a replacement carpet is not necessarily a capital improvement as it does not create new equity, or prolong the life of the building or make it suitable for a different use.

>> I knew I was right<< I agree with you, Pacun. MFS does NOT require you to itemize when your spouse does. You can ALWAYS take the standard deduction if you want to. According to the instructions to line 40a of Form 1040 at My link, even if your spouse itemizes on a separate return you CAN still take the appropriate standard deduction by simply checking the box on Line 39b. If anyone doubts me, just click on My link to look it up.

>>I had checked the pub and it - of course - doesn't have the 80% rules, or anything about the 100 miles << Well, of course it doesn't have the 100 miles because there is no such rule. But the 80% is very clearly spelled out on page 12.

>> Reporting the received spousal support on line 11 and then reducing AGI with the same amount on line 31<< In my opinion, based on Pub 504 at My link, payments can ONLY count as alimony "if the spouses do not file a joint return with each other." That is the opposite of the interpretation in the original post. In my opinion, married taxpayers can still file a joint return even if one is supporting the other!

>>all the rules<< For a quick but comprehensive review, spend twelve minutes browsing Pub 463 at My link. Start with the definition of "tax home." Also look at the rest requirement and the special allowance for transportation workers.

>>They actually filed separate returns<< How did innocent spouse relief become an issue with separate returns?

>>any suggestions?<< I suggest you take a break--you are over-thinking this one. Since she was deceased before May 2009, she was not eligible for the $250 payment.

>>any rule that says they each can't take the credit<< None at all. In my opinion, they can certainly each take the whole credit. They can't BOTH take the whole credit, however.

>>taxpayer failed to show that she provided more than 1/2 of son's support.... TC Memo 2002-258 << As I said, "Why do we still have to argue this point FIVE years after Section 152 was changed?" You'll have to use fingers on both hands to figure this out, but 2002 was EIGHT years ago.

>>No question that points on principal residence are deductible<< Ummm--okay. But hypothetically there COULD be a small question or two, don't you think?

>>I've never known how the houses got in an IRA<< Okay, I misunderstood that in the original post. An IRA can BUY rental property, but it must pay full cash price without financing. There are additional problems if the taxpayer helps select the tenants or does any kind of repair or service on the property. But if he didn't have a mortgage and did have a property manager, he's probably okay. Basis of the property is irrelevant. Like any other distribution, just use his IRA basis as a whole (if any) as tracked on Form 8606.